Re-shoring work could deliver 35,000 jobs bonanza to West Midlands
RE-SHORING work to West Midlands’ companies could contribute £1.8bn in GDP and 35,000 jobs to the region’s economy over a 10-year period to 2025, a new study has found.
The EY report, Re-shoring – Time to seize the opportunity, predicts the region’s crucially important automotive industry could also be the main beneficiary.
It also revealed that re-shoring could add £15.3bn of GDP to the UK economy and equate to more than 315,000 jobs across the UK over the same period.
The top five regions that offer the greatest re-shoring potential are said to be the North West, South East, West Midlands, Yorkshire and The Humber, and East Midlands.
Sara Fowler, EY’s senior partner in the Midlands, said: “Offshoring in the 80s and 90s saw a dramatic reduction in British manufacturing and a shift to services industries that resulted in a fundamental restructuring of the British economy. While other regions saw rapid growth and wealth creation, the West Midlands suffered from high rates of unemployment.
“But the economics underpinning this trend appear to be reversing and presents the region with a once-in-a-generation opportunity. While increasing wages in developing countries are eroding their labour cost advantage, there are many more factors driving business to choose British shores. The desire to guarantee quality and the imperative to reduce time to market are increasingly important drivers of location decisions.”
EY said that while the cost advantages of producing goods in the developing world were lessening, wages are still significantly below those in the UK, therefore it is unlikely that re-shoring will occur across the board. However, the report adds that certain sectors could see a high proportion of activity re-shored given the right incentives.
Steve Wilkinson, UK & Ireland Managing Partner, Markets at EY said: “Those businesses that do relocate to the UK will predominantly be capital intensive sectors such as aerospace, defence, automotive, petroleum products and clothing, serving the European market.
“They will be businesses where quality and brand are important and consequently the supply of a highly skilled workforce is imperative. When firms do choose to re-shore to the UK they will tend to cluster in regions that best serve their business, in close proximity to key suppliers, infrastructure and an able workforce.”
However, the report adds a cautionary note, saying that re-shoring industry and jobs back to the UK is not guaranteed. It said the Government had taken some important steps to ensure that the UK remained an attractive place to invest and start a business, but competition was intensifying.
“The UK is not the only country vying for re-shoring investment; competition from other developed countries such as the US, Germany and France and emerging markets in Eastern Europe puts the opportunity at risk. Government and business must work together to provide the correct framework so that the advantages of moving production to the UK can be realised,” added Ms Fowler, left.
“While steps have been taken to make the UK more attractive to businesses looking to re-shore such as reducing the headline rate of corporation tax to the joint lowest in the G20, providing competitive reliefs for innovative and high tech industries, and UKTI’s ‘Britain is Great’ campaign, more can be done.”
